Lithuania's ruling leftist alliance coalition and the country's new Labor Party have agreed to form a new government for the country.

The populist Labor Party emerged as the largest group in parliament in last month's elections, but failed to win enough seats to form a government.

Representatives of the Labor Party and the Social Democratic and Social Liberal parties signed an agreement on the principles of a coalition Wednesday.

Established parties across the political spectrum had explored the possibility of forming a coalition in order to exclude the newcomer Labor Party. They feared that its leader, Russian-born millionaire Viktor Uspaskich, would revive Moscow's influence in Lithuania. But the talks failed when leaders of the current coalition agreed to open simultaneous discussions with the Labor Party.